A great agent will help walk you through the process from start to finish and the home inspector is there to protect you in regards to the condition of the home.

So, I would be very conservative (for your standpoint) on the researched estimate.I would do what I suggested above, then if the tenant takes you to small claims court you explain to the judge the legislative time restrictions you were under in order to come up with an accurate repair expense.This is yet another example of how "tenant protection" laws, in practice, end up hurting the tenant in the end.

We now are looking to create an LLC and setup the necessary legal documents to protect both parties and layout the terms of the agreement.

How can I protect myself?  

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings.

This is because DSCR loans do not follow/ pass consumer protection laws. when you live in the property, it creates massive problems for this loan type and the lender which would issue it to you. 

Work with an attorney to ensure that your interests are protected, and that the agreement aligns with your long-term goals.

This is my personal opinion, which probably won't be popular.If you are worried about the cost of hiring an attorney to create a proper operating agreement for your LLC, you probably don't need an LLC, and if you choose to use an online site to create an LLC, you probably get the protection you paid for.

While you can start with a written agreement, a professional document will help protect both of you, particularly in terms of ownership, responsibilities, and profit-sharing.

For contracts, consult a real estate attorney and use standard assignment agreements to stay protected.